WSJ.com - The Banker Baiters

 

WSJ.com - Opinion: The Banker Baiters

 

White House financial czar Elizabeth Warren is off and running for Senate in Massachusetts, and her theme is t hat "the people on Wall Street broke this country." Meanwhile, Senator Dick Durbin this week urged customers to stage a run on Bank of America because it recently raised debit-card fees by $5 a month, President Obama piled on by telling regulators to punish BofA, and even Treasury Secretary Tim Geithner has joined the fun by vowing that America will "prevail" over the banks.

"Prevail"? Who is America's chief financial steward talking about here, the Taliban? What a turnaround: A couple of years ago Mr. Geithner was saying that Congress had to rescue the banks he was supervising at the New York Federal Reserve for the good of the economy, and now he's saying the same banks are enemies of the people.

Such are the vagaries of re-election politics when you don't have much else to run on. Lacking an agenda, much less an economic achievement, Democrats appear to have decided to campaign against Wall Street and the banks. Perhaps soon we'll see Ms. Warren and the President join the "Occupy Wall Street" protests in lower Manhattan. Maybe they can all march arm-in-arm on the New York Fed.

But how could they avoid protesting their own policies? The entire American financial system now operates under the rules they wrote in 2009 and 2010 when Democrats controlled both houses of Congress.

The predictable consequences of those rules are starting to appear in the marketplace. The 2009 CARD Act made it more difficult for credit-card issuers to raise rates and charge fees. New Federal Reserve regulations limited overdraft charges. Then came the 2010 Dodd-Frank law, which included a provision authored by Mr. Durbin that cut the "swipe fees" that debit-card issuers can charge merchants like Wal-Mart to process transactions.

Don't ask what any of this has to do with preventing the next financial crisis. The new rules and laws achieved Washington's goal of cutting bank revenues, by more than $15 billion per year. But it costs money to provide checking services and electronic payment networks, and the political class is now stunned that banks would seek new ways to profitably serve customers.